EPA punts: Agency delays 2014 RVO determination into next year

The U.S. EPA announced Friday morning it would not be finalizing the 2014 renewable volume obligation requirements (RVO) by the end of the year. This will also affect the compliance deadline for 2013, which will be moved into 2015, and the agency will modify the system used to track renewable identification numbers (RINs) to ensure RINs generated in 2012 are valid for determining 2013 standards.

Industry spokesmen, who had been expecting an announcement after the fall elections, responded quickly, decrying the continued uncertainty that has troubled the biofuels market and squashed new investment. They also interpreted the delay as a hopeful sign the agency is likely to reverse its proposed reduction in the volumes for 2014 RVO to meet the renewable fuel standard.

Nearly a year ago, on Nov. 29, 2013, the agency unleashed a storm of protest from the renewable fuels industry when it published its proposed rulemaking for the 2014 RVO, scaling back the volumes. The agency acknowledged the controversy in its announcement, hinting at major changes. “EPA has been evaluating these issues in light of the purposes of the statute and the Administration’s commitment to the goals of the statute to increase the use of renewable fuels, particularly cellulosic biofuels, which will reduce the greenhouse gases emitted from the consumption of transportation fuels and diversify the nation’s fuel supply.”

Following is a rundown of the industry organization responses:

Renewable Fuels Association President and CEO Bob Dinneen said deciding not to decide is not a decision, and would perpetuate the uncertainty in the biofuels industry. “Nevertheless, the Administration has taken a major step by walking away from a proposed rule that was wrong on the law, wrong on the market impacts, wrong for innovation, and wrong for consumers,” he said in a statement following the announcement. “We look forward to working with the Administration to assure this critically important program is implemented consistent with congressional intent, to the benefit of consumers and with the goal of advancing the evolution of biofuels production and marketing. Refiners will continue to resist the competition from biofuels. The RFS must be allowed to be the market forcing mechanism it was designed to be. In the end, the verdict on today’s announcement can only be made after a decision on a path forward for biofuels is identified.”

Growth Energy CEO Tom Buis said the announcement is a clear acknowledgement the proposed rule was flawed. “The decision to withdraw the rule is a win for the renewable fuels industry. While a further delay is unwelcome news, at the end of the day, the most important aspect is that the EPA gets the final rule right. The EPA must implement the RFS as it was originally envisioned and supported by a bipartisan majority in Congress.”

Brian Jennings, Executive Vice President for the American Coalition for Ethanol, commented, “Big Oil came close to bullying the Administration to completely rewrite the RFS this year so oil companies could escape their legal responsibility to blend more ethanol in gasoline. But thanks to thousands of comments from ACE members and other biofuel supporters, EPA wisely chose to reconsider their ill-advised proposal which would have legitimized the so-called ‘blend wall.’ While we will reserve full judgment until they finalize the 2014 targets next year, it certainly appears the Administration recognizes their proposed RFS changes were inconsistent with legislative history and the Clean Air Act.”

Advanced Ethanol Council Executive Director Brooke Coleman said the EPA’s pullback on the 2014 RFS rule is the right thing to do. “While the cellulosic biofuel industry will not get the policy certainty it needs from this decision, it does suggest that the Administration is listening when it comes to our concerns about giving oil companies too much power to avoid its obligations under the RFS going forward.”

Biotechnology Industry Organization President and CEO Jim Greenwood, said the delay continues the atmosphere of uncertainty for the advance biofuel industry. “The RFS supports companies that invest in, build and start up new advanced and cellulosic biorefineries here in the United States. It’s clear that the advanced biofuel industry has made rapid strides to increase production capacity to meet the annual volume requirements. Unfortunately, the delay in this year’s rule already has chilled investment and financing of future projects, even as first-of-a-kind cellulosic biofuel plants are right now starting up operations. The industry needs a final rule that is legally appropriate and continues to support our efforts.”

Chip Bowling, Maryland farmer and president of the National Corn Growers Association, said it is important the 2014 and 2015 renewable fuel requirements are consistent with what Congress set forth in the RFS. "Corn farmers have produced a second record crop in two years-resulting in corn prices that have fallen below the cost of production in many parts of the country. Our members have been frustrated by the uncertainty and delays surrounding the RFS. When the time came for them to speak up, they did so—loudly and forcefully. Our growers and allies sent the EPA a clear signal when this proposal was first issued, with nearly 200,000 people responding to the public comment opportunity in opposition to the reduction. Nearly 10,000 farmers called the White House directly. We have never before seen so much grassroots interest in a particular issue. Our farmers will continue to raise our voices as necessary in defense of this important policy."

Novozymes Americas President Adam Monroe thanked the EPA for listening to the concerns of the industry. "The biofuels industry has grown in the United States because of a predictable and supportive federal policy. Novozymes has invested millions of dollars in research, construction, and innovation to create biofuel technologies that are cutting carbon emissions,” Monroe wrote in a statement. "We made these strategic choices because America’s Renewable Fuel Standard was strong, stable and clear. The EPA now has a great opportunity to restore confidence in the Obama Administration’s clean energy and climate agenda by returning to its historical administration of the RFS.”